Arbitration clause

 

There are a number of standard clauses found in commercial contracts concluded between business entities. These clauses or group of clauses are known as ‘boilerplate’ clauses. An example of such a boilerplate clause is an arbitration clause. An arbitration clause is inserted into a contract to ensure that if a dispute in relation to the contract arises, arbitration will be used to resolve the issue.

An arbitration clause must be carefully drafted. It should clearly define what disputes should be resolved by arbitration. For example, should arbitration be used to resolve all disputes that arise between parties or just the ones arising out of that specific contract?

Arbitration clauses have been used more frequently in commercial contracts in recent years. This is because arbitration is seen as a better option to litigation in some cases as it is often more expedient and cheaper than litigation.

An arbitration clause should designate a specific party to be the arbitrator. The arbitrator will be the person responsible for hearing the dispute and passing judgment. If you think the arbitrator may be biased, you should query this with the other party before signing the agreement. However, if you have already signed the agreement you can still challenge the validity of the arbitration clause in court as long as you have solid grounds to do so. For example, if you are claiming that the arbitrator is biased, on what basis are you making this claim?

If you would like to obtain legal advice and information on arbitration, including drafting arbitration clauses or using arbitration to resolve a dispute, Caven can put you in touch with a local specialist civil/commercial litigation / arbitration solicitor free of charge. So, if you have any questions or would like our help in finding local civil/commercial litigation arbitration solicitors please call us on 08001 221 2299 or complete the web-form above.

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